Dr SOUTHCOTT (6:09 PM)
—I rise to speak on the National Health Amendment (Pharmaceutical Benefits—Budget Measures) Bill 2002. Before the Howard government was elected in 1996, in our health policy we promised to keep Medicare, we promised to keep bulk-billing and we promised to keep community rating for private health insurance. We have kept all those promises. What is more, we have strengthened each of the three pillars of Medicare. One of the three pillars of Medicare is the Pharmaceutical Benefits Scheme. It provides access to necessary and lifesaving medicines at an affordable price for all Australians, and most prescription medications are subsidised by the PBS. The PBS began life on 1 June 1948 and supplied lifesaving and disease preventing drugs from the British Pharmacopoeia to pensioners and others. At present the PBS covers 593 generic drugs, available in 1,461 forms and strengths and marketed as 2,506 brands.

Instead of patients paying, for example, $189.19, which is the price to the government for human insulin, a pensioner or a concession cardholder will pay $4.60 and a general consumer will pay $28.60. For other drugs such as Goserelin or Zoladex, used for prostate and breast cancer, the average price is $726.08 to the government. For a concession cardholder it is $4.60 and for a general patient it is $28.60. Since 1996 the Howard government, on recommendation from the Pharmaceutical Benefits Advisory Committee, has added new items to the PBS at a gross cost of greater than $1.5 billion. The committee is always considering newer and more expensive drugs that pharmaceutical companies have submitted to be listed. In the last decade the cost of the PBS has increased from $1.23 billion in 1991-92 to $4.8 billion in 2001. Over the last decade, the growth in taxpayer expenditure has been greater than 14 per cent per year. It is the fastest growing area of health expenditure.

In 1990 the health minister at the time, Brian Howe, realised the PBS was under pressure. In 1990 the patient copayment for concession cardholders was increased from $2 to $2.50, and it was increased for general patients from $11 to $15. At that time the Deputy Leader of the Opposition was working for the health minister, and presumably she supported the copayments. But she was not alone: in 1990 the then opposition, now the government, supported the copayments as well, because we recognised that you had to make changes to the PBS to ensure that it would be sustainable in the future. It is easy for Labor when they are in opposition; it is different when they are in government. When they are in opposition if there is a hard decision they just oppose it. It is just cheapjack populism again and again. In 1991-92 under a Labor government, when the PBS cost $1.16 billion, patient copayments were approximately 20 per cent of the total cost. Last year patient copayments were approximately 15 per cent. After these changes are passed, the proportion that patients will be paying under the PBS will still be less than what they were paying 10 years ago under the Labor government.

We cannot afford to let the cost of the PBS get out of hand. It will affect the capacity of the government to list newly developed, expensive medicines. As scientists understand more of the human genome, there is the possibility of medicines being targeted at the genetic level. Presently medicines are targeted at the molecular level. This is an exciting time for medical research and for more effective medicines, but it is endangered by the capacity of the PBS to subsidise these new medicines. As part of the 2002-03 budget, the Treasurer released a visionary document in the form of the Inter-generational Report. The Intergenera-tional Report looks 40 years into the future to identify challenges for the government and community. The PBS is a challenge today and the report predicts it will be an even greater challenge in 40 years time.

The Intergenerational Report projects the PBS could grow to almost $60 billion in 40 years time. It predicts that the proportion of expenditure that the Commonwealth government will spend on the PBS will be five times greater in 40 years from now. It would be easy to wait until the pressure on the PBS becomes unsustainable. Then we will be faced with constituents who are unable to see newer, lifesaving drugs coming on to the PBS, and we will be forced in the future to make drastic changes. But it is important to take small steps now to make the PBS sustainable.

This bill proposes amendments to the National Health Act 1953. The amendments implement changes to the PBS patient copayments and the safety nets that were announced in the 2002-03 budget. From 1 August this year, the general copayment will increase from $22.40 to $28.60 and the concessional payment copayment will increase from $3.60 to $4.60. There has been persistent misinformation in the media and by the Labor Party about the increases in the patient copayment for medicines listed under the Pharmaceutical Benefits Scheme. The aim of Australia's national medicines policy is to continue to ensure timely access to medicines that Australians need at a cost that individuals and the community can afford.

Continuing high levels of growth of the PBS will affect the capacity of taxpayers to subsidise newer and more expensive medicines. For concessional patients, the safety net will apply after 52 scripts in a calendar year; they will pay nothing for additional scripts in the year. For general patients and their immediate family, the safety net will apply after 31 scripts in a calendar year; they will pay the concessional rate of $4.60 for additional scripts in the year. For general patients, if the cost of a drug is lower than the present copayment of $22.40, there will be no increase in the copayment. Almost half of all medicines listed on the PBS cost less than the present general patient copayment. This means there will be no increase in the cost of common medications such as Ventolin for asthma, Zantac for peptic ulcers, Noten and Tenormin for high blood pressure and Diaformin and Diabex for diabetes.

The increases in the patient copayments will take the place of the indexation that would otherwise have occurred on 1 January 2003. The indexation of patient copayments and safety net thresholds resume from 1 January 2004. Under the PBS safety net arrangements, Australians are protected if they require large amounts of PBS drugs. We have already heard that after 52 scripts general patients and their immediate family will pay the concessional copayment for additional scripts. Concessional patients will pay nothing after 52 scripts. The average concessional patient has 19 prescriptions per year. So, on average, someone with a concession card will be contributing an additional $19 per year to help secure the future of the PBS.

As I said before, the PBS is one of the highest growing areas in current health expenditure. Some of the drivers of the growth in the PBS include the ageing of the population—which has a limited role—and adding newer generation pharmaceuticals to the scheme. For example, a drug like Zyban, which is the sixth most costly drug on the PBS, will cost on average $249.51—that is the cost to the PBS. There has also been a growth in preventative medicine. For example, the statins, which are the most expensive group of drugs on the PBS, cost $580 million. You might remember that in last year's budget there were some measures which related to evidence based medicine in the use of prescribing statins, because there are algorithms which show how important it is to look at the patient, their family history, their risk factors and so on. Not everyone will benefit from the use of statins.

Over the last 10 years, there has also been improved detection of illnesses such as depression, high blood pressure, high cholesterol and asthma. There is an increase in community awareness of new, more effective drugs. We saw this with Celebrex. Through the use of things like the Internet, people are very aware of new drugs when they have already been listed in countries such as the United States. There was already a pent up demand when Celebrex was listed on the PBS. We have also seen cost shifting by the states onto the Commonwealth. For example, when people leave hospital, there are limited drugs available on discharge. We have seen privatisation of outpatients. Another driver of the growth in the PBS is the increase in numbers in the concessional category. But one of the most important drivers which we need to do something about is leakage in the PBS. Celebrex and Losec are examples of this, where people are being prescribed upwards, if you like. They are being prescribed a newer, more expensive medication when an older one would have been more appropriate. There are also prescriptions of inappropriate drugs for some conditions. For example, it is estimated that $100 million is spent each year on antibiotics for conditions for which they are not effective.

I have listened very carefully to the opposition's contributions, and I think they have said that they oppose this rise in the patient copayments and would like to see other measures which will help the sustainability of the PBS in the future. That is really a cop-out, because the PBS already contains a number of existing cost containment measures. Patient copayments, of course, we already know about and that is a very effective way of containing costs. We also have the brand premium policy and the therapeutic good premium policy. We enter into price volume agreements. There are also quality incentives for prescribing pharmaceuticals. There is a national prescribing service, which has been very effective, and there is also improved monitoring of the entitlements to the PBS which, in the last two years, has excluded temporary residents. There were a number of temporary residents who were accessing the PBS. There were also some simple price control measures through the PBPA.

Clearly, in order to provide timely access to newer generation pharmaceuticals, the PBS will need reform. The Commonwealth government needs to take decisions now to ensure the sustainability of the PBS in the future. Government contributions to the PBS have been increasing at a higher rate—13½ per cent—than the patient copayment of 12½ per cent. As I said before, when Brian Howe was the minister for health, the patient copayment was around 20 per cent. It has now declined to around 15 per cent, and these budget measures—which are opposed by the opposition—will increase the payment to approximately 20 per cent, but it will still be less than it was 10 years ago.

The Democrats have argued in a press release that the changes in the copayment will shift costs onto state governments. This assumes that essential medicines will not be prescribed as a result of this measure. I think this is overstating and overclaiming. Their assumption also ignores the cost shifting which is already occurring from the state governments to the Commonwealth government through decreased prescribing for outpatients and hospital pharmacies. Many of the suggestions which the Democrats have made, such as price volume agreements and prescribing practices, are already part of the cost control measures in the PBS.

Increasing copayments is a good way of reducing the PBS cost, and any impact which is felt by low-income earners is compensated through pension rises and through the pharmaceutical allowance. One of the key problematic growth areas has been the rise in the cost of newly listed pharmaceuticals used outside their indications. Celebrex and Vioxx, which are the fourth and seventeenth most expensive drugs on the PBS respectively, were used for many indications outside the listed one of chronic arthritis. As a result, Celebrex, which was expected to cost $40 million in the first year, cost $160 million. Estimates vary, but it is estimated that there are between $50 million and $1 billion in inappropriate prescribing on the PBS.

In concluding, I will run through some of the highest costing drugs on the PBS because, among the community, I do not think there is an awareness of how much many of these drugs are subsidised by the government. The most expensive drug is Simvastatin, which is used for high cholesterol. Its average price is $60.86, and it is available to concessional patients now for $3.60. After 1 August, it will be available for $4.60. Of the total cost of this medication, $282 million, $251 million is borne by the government. Atorvastatin, or Lipitor, is used for high cholesterol and the average price is about $60. The patient contribution is $3.60 for a concessional cardholder and $4.60 after 1 August; it will be $28.60 for a general patient. The government pays $250 million of the $290 million.

Losec, which I mentioned earlier in my speech, which is used for peptic ulcer, has an average price to the government of $64.14; it is available to concessional cardholders for $4.60. Celebrex, which is used for arthritis, has an average price of $46.92; it is available to concessional cardholders for $4.60. Zyprexa, or Olanzapine, which is used for schizophrenia, has an average price of $219.18; it is available to concessional cardholders for $4.60. Zyban, which is well known and used for nicotine addiction, has an average price of $249.51; it is available to concessional cardholders for $4.60. Seretide Accuhaler, which is used for asthma, has an average price of $70.51; it is available to concessional cardholders for $4.60 and to general patients for $28.60.

Pravastatin, another one of the `statins' used for high cholesterol, has an average price of $61.01; it is available to concessional cardholders for $4.60 and to others for $28.60. The cost of human insulin, used for diabetes, is $189.19; again, it is available at a subsidised price to concessional cardholders and others. Lastly, Zoloft, the tenth highest government cost PBS drug, used for depression, is $38.88 and is available at that subsidised price. In conclusion, these changes are important to ensuring the ability of the government in the future to list newer generation, more expensive and more effective medications. I support this bill and commend it to the House.